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Evaluating urban transport improvements: cost benefit analysis in the presence of agglomeration and income taxation

By Tony Venables

Abstract

There is a substantial empirical literature quantifying the positive relationship between city size and productivity. The paper draws out the implications of this productivity relationship for evaluations of urban transport improvements. A theoretical model is developed and used to derive a wider cost-benefit measure that includes productivity effects. The order of magnitude of such effects is illustrated by calculations in a simple computable equilibrium model. It is argued tht productivity effects, particularly when combined with distortionary taxation, are quantitatively important, substantially increasing the gains that are created by urban transport improvements

Topics: HE Transportation and Communications, HB Economic Theory, HJ Public Finance
Publisher: Centre for Economic Performance, London School of Economics and Political Science
Year: 2004
OAI identifier: oai:eprints.lse.ac.uk:2205
Provided by: LSE Research Online

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